SCAM ALERT!
Obtaining a Reverse Mortgage can be great way for seniors to access the equity that's built up in their homes over the years but seniors must learn how to avoid those in the industry who are dishonest. The Reverse Mortgage Times is constantly monitoring the market for fraudulent actions. We have seen increased activity in the following scams:
BEWARE of the Reverse Mortgage Calculator scam
Using an online calculator to get a cash-out estimate for a Reverse Mortgage is actually a very simple process. Most Reverse Mortgage calculators only require that you input the current value of your home, the balance of your existing mortgage, and the ages of the borrowers. You will then be provided with a reasonably accurate estimate of the money you can receive.
We have found that many unscrupulous lenders are plugging in inaccurate interest rates in their online calculators causing inflated cash-out figures.
BEWARE of lenders not approved by the government to originate reverse mortgages
ALL Reverse Mortgage lenders must be approved by the Department of Housing and Urban Development to offer HECM reverse mortgages. We have had reports of companies claiming to have HUD approvals originating Reverse Mortgages and attempting to charge rates and fees in excess of those mandated by HUD. This is illegal. Check the HUD website to verify that your Reverse Mortgage lender is truly authorized to originate HECM Reverse Mortgages.
BEWARE of the "Shared Appreciation" scam
The federally insured Home Equity Conversion Mortgage (HECM) does not have an equity sharing or shared-appreciation feature. Any increase in equity belongs to the homeowner and/or their heirs. Stay away from anyone offering the senior the “opportunity” to obtain more money in exchange for giving up a percentage of the future value of the home.
